Insurers Tell Congress: Beware Rate Shock If Obamacare Enrollment Extended

Image by Shutterstock/Sergey Nivens
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The health insurance industry is planning to warn members of Congress that extending Obamacare’s open enrollment period, which a group of Democratic senators have begun to urge the White House to do, could have a disastrous effects on insurance premiums.

The proposal to extend the open enrollment period, which has been endorsed by 10 Democratic senators, is a reaction to the well-documented problems with in its opening month. With many people having trouble applying for insurance through the website, and the administration setting a Nov. 30 deadline for the site to be fully functional, the senators say people need more time to sign up for coverage. The enrollment period is scheduled to end March 31. The senators haven’t asked for a specific new end date yet.

But expect to start hearing a significant amount of pushback from the industry, with a message focused on the fact that insurance premiums could skyrocket in 2015 if the enrollment period is extended.

“We are focused on educating lawmakers and the broader policy community about why the individual mandate and defined open enrollment periods are essential to achieving broad participation in the marketplaces,” Robert Zirkelbach, spokesman for America’s Health Insurance Plans, a major industry lobbying group, told TPM. “Without these enrollment incentives, many young, healthy people may wait to purchase coverage until they need it, driving up premiums for everyone else.”

The problem, according to the industry, is that an extended enrollment period could skew their calculations for 2015 premiums. Here’s why.

Right now, insurers need to submit 2015 rates to the U.S. Department of Health and Human Services between April 1 and April 30, 2014. If the enrollment period ends in March, as currently scheduled, insurers will know exactly what their customer base looks like as they make projections about their 2015 rates.

But if people can still sign up after March 31, either while or after insurers are making those calculations, it creates a few problems. Here’s the big one: Most experts assume that young and healthy people — who are crucial to making the law’s finances work by offsetting the costs of sicker and older enrollees — are more likely to wait till the last possible moment or until they get sick to sign up for insurance.

If that’s true and they can’t be accounted for when insurers are projecting their 2015 rates because of extended enrollment, that could lead to an older and sicker pool when those calculations for 2015 are being made. That would likely increase rates. And generally, the uncertainty about the pools could cause insurers to err on the side of caution.

“We think it’s important for everyone to understand that the individual mandate is critical to making the insurance reforms work and to ensuring affordable coverage for consumers,” the Blue Cross/Blue Shield Association said in a statement to TPM .”Unless everyone is covered, the reforms included in this law fundamentally do not work. An extension of the open enrollment season is effectively a delay of the individual mandate, with the same serious consequences for consumers.”

As AHIP put it in a separate statement issued after the senators’ Friday letter, an extension “could have a destabilizing effect on insurance markets, resulting in higher premiums and coverage disruptions for individuals and families.”

“Moreover, if these vital enrollment incentives were to change, the premiums health plans filed for next year would have to increase to account for fewer young and healthy people signing up for coverage. Extending the open enrollment period could also cause significant uncertainly and instability in 2015 premium rates as health plans would have to start submitting premiums to regulators before knowing who is enrolled in their insurance plans.”

Administration officials have told TPM that they aren’t currently considering extending enrollment. But the concern within the insurance industry is that calls for an extension from more lawmakers, especially Democratic ones, will increase pressure on the administration to act. So the industry sees their lobbying effort an important way to preempt that pressure.

Image by Shutterstock/Sergey Nivens

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